Selling SaaS Globally paddle.com Rarely does a software founder start out considering tax compliance, yet when you grow successfully and internationally, it quickly becomes a serious and complex issue. Startups soon end up tripping over the sales tax thresholds in various countries, forcing emergency hires and reactive investments, attracting fines from various jurisdictions” Will Southgate Finance Director, Notion Capital Why is this a challenge? Custom regulation has now been introduced in more than 40 countries governing sales tax for digital goods, software, and SaaS products. Sales tax thresholds, rates, and periods vary not only between countries but also between the di昀昀erent jurisdictions within them. Filing systems and processes also di昀昀er – LATAM uses electronic invoicing, while Japan requires you to work with local agents to 昀椀le your taxes. The USA alone has 11,000 di昀昀erent tax jurisdictions. Here, sales tax rates and thresholds vary across di昀昀erent states, cities and – in one case – even a large McDonald’s. This degree of variation makes it very di昀케cult to keep on top of your obligations, or to automate processes for meeting them. And changes to tax regulations are ongoing. Monitoring the landscape and ensuring processes are aligned to new rules can become a full time, multi-person job. While it’s theoretically possible to manage in-house, sales tax takes a huge amount of energy and can soon become overwhelming for lean, scaling teams. 14